October 26, 2018 / 4:30 AM / a year ago

Volvo Cars third-quarter income falls due to launch costs, higher tariffs

(Reuters) - Geely-owned Swedish carmaker Volvo Cars, which postponed plans for a listing this year, said on Friday third-quarter operating income slumped nearly 50 percent due to product launch costs and higher tariffs.

The Volvo logo is pictured on a car in a car dealership showroom in Riga August 18, 2014. REUTERS/Ints Kalnins/File Photo

However, the company expects continued growth in revenue and retail sales in 2018, supported by its renewed product portfolio and lower capital expenditure.

Volvo Cars said its operating income fell to 1.84 billion Swedish crowns ($201.5 million) in the quarter ended Sept. 30, from 3.67 billion Swedish crowns a year earlier.

"The on-going trade tension between U.S. and China is worrisome for the auto industry and for us," Chief Executive Officer Hakan Samuelsson said in a statement bit.ly/2Pl5s2e.

“The best way forward should be open, balanced trade with no car import duties for EU, U.S. and China.”

The carmaker’s revenue rose 18 percent to 56.78 billion Swedish crowns, helped by strong sales momentum in all three regions.

Under Geely’s ownership, Volvo has turned around its fortunes and reported four straight years of record sales, aided by its steady push into the premium automobiles market that has pitted it against Mercedes-Benz and BMW (BMWG.DE).

The company and its Chinese owner Geely said in September they had postponed plans to float shares in the carmaker, blaming trade tensions and a downturn in automotive stocks.

Sources earlier said the company had been discussing an IPO to value the carmaker at between $16 billion and $30 billion.

Volvo Cars opened its first U.S. plant in Charleston, South Carolina this year and is now ramping up S60 production.

Yet, the company is not immune and has sought exemption on imported vehicles and is shifting XC60 SUV production for the U.S. market to Europe from China to avoid Washington’s new duties on Chinese imports.

It has also warned that the trade dispute could undermine plans to create up to 4,000 more auto jobs in the heavily Republican state of South Carolina.

Reporting by Esha Vaish in Stockholm and Bhargav Acharya in Bengaluru; Editing by Sunil Nair and Gopakumar Warrier

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